The Economics of Extending Bush's Tax Cuts

Democrats do not plan on reversing the planned end date for
President Bush's tax cuts for the wealthy, which Republicans scheduled
to sunset this year. But many in the GOP are now calling on Congress to pass an extension on the tax break, which is generating significant debate
over the economic merits of reduce the tax burden on the wealthiest
Americans during the recession. Here's what pundits, politicians, and
even experts are now saying.

1. Extending the tax cuts would be a good way to stimulate the economy. 2. Allowing the high-income tax cuts to expire would hurt small businesses. 3. Making the tax cuts permanent will lead to long-term growth. 4. The Bush tax cuts are the main cause of the budget deficit. 5. Continuing the tax cuts won't doom the long-term fiscal picture; entitlements are the real problem.

Extend Them for One Year, Then Reform The Atlantic's Derek Thompson advises,
"extend the Bush law for one year and
consider a more comprehensive tax overhaul in 2011." He explains, "the
White House expects to take on broader tax reform next year,
as Geithner also noted yesterday. Tax reform on par with 1986 -- that
is, something like the Wyden-Gregg proposal to lower rates and broaden
the tax base by eliminating deductions -- is holistic. It touches on
everything. So it doesn't particularly matter
what Congress does with the Bush tax cuts in 2010's lame duck session."

Palin: 'Idiotic' To End Tax CutsSarah Palin said
on Fox News Sunday that it is "idiotic to think about increasing taxes
at a time like this" and that cutting them will "lead to even fewer job
opportunities for Americans."

Greenspan: Extending Cuts Would Be 'Disastrous' Former Fed Chairman Alan Greenspan said
on Sunday's Meet the Press that extending the Bush tax cuts without
offsetting the costs elsewhere could end up being "disastrous" for the
economy. "I'm very much in favor of tax cuts but not with borrowed money
and the problem that we have gotten into in recent years is spending
programs with borrowed money, tax cuts with borrowed money."

What We Could Buy Instead Center for American Progress' Pat Garfalo explains,
"Extending just the cuts for the wealthiest two percent of Americans
will cost $830 billion over ten years." He quotes colleague Michael
Linden, "to put that figure in perspective, $830 billion is enough to
pay for all veterans’ hospitals, doctors, and the rest of the Veteran’s
Affairs health system, plus the United States Coast Guard, plus the Food
and Drug Administration, plus the operation and maintenance of every
single national park for the entire 10-year period — with more than $100
billion left over."